Trump Knows a Slumping China Needs US More Than We Need Them

As people get wobbly over the so-called “trade war” between the United States and China, President Trump has steadily maintained, given our rapidly growing economy, that we are in a “strong position”.U.S. unemployment numbers are way down, while wages, optimism, and consumer spending are all up.

And while we’ve taken a recent hit to the stock market, China’s been in and out of Bear territory for about a year.That’s even with their government encouraging any company whose stock price has fallen below its book value per share, to buy back shares.

Simple, common sense math is also on our side.We are slapping tariffs on $200 million in Chinese goods, while they’re “retaliating” by taxing us on $60 million worth of products.That’s less than one-third of what we’re collecting, and they’ve got three times as many people (about 1 billion to our roughly 320 million) to keep fed, and productive.For an authoritarian regime, that’s walking an economic/social tightrope.

Plus, we’ve learned China’s auto sales fell, from one year earlier, 17.7% in April.It continues a lengthy slump in that critical industry.Total vehicle sales, including trucks and buses, dropped 14.6%.Last year’s purchases suffered their first decline (4.1%) in almost 30 years.

Yesterday, AP reported, “Jittery consumers are less willing to make big purchases amid a tariff war with Washington and unease about China’s economic outlook. Growth in the second-largest global economy held steady in the latest quarter but that was supported by government stimulus spending and higher bank lending.”Sounding a bit like a bubble?

Today the AP appears prophetic, as CX Live writes, “Growth in China’s retail sales has slumped to its lowest level since May 2003.”The spending, which includes monies spent by the government, businesses, and households was down year to year, 1.5%.Also significantly lower, year to year (-3.1%), was production at factories, mines, and utilities.

It’s also important to note that these statistics are being provided by a country notorious for dramatically inflating their economic numbers.So how bad could it be over there, and how much is a slumping China willing to bet they can right their economic ship while in a trade war with an increasingly prosperous United States?

Trump knows that country needs us more than we need them, and he’s figuring, sooner or later, they’ll know it too.

5 COMMENTS

What Trump is doing is not a justification for tariffs and should not be viewed that way. Trump appears to be using tariffs as a tool to undo the trade imbalance with an enemy nation. China has taken complete advantage of the US over the years, as have many other countries. When negotiating with economic illiterates like we’ve had in the past administrations, on both sides of the aisle, what do you expect. God has truly given us a reprieve with Donald Trump.

President Trump is taking on the Chinese and others that have been taking advantage of gutless US negotiators for decades. He is using tariffs to bring them to their knees and will win the battle if he is allowed to continue this strategy. He is truly a champion for American interests. He is the best negotiator we have ever had in the oval office. There will be some suffering in the course of the battle, but we must support his efforts on our behalf… it’s common sense. By the way, before we had a federal income tax, how did we run the country? Tariffs provided most of the income required, and there was very little national debt.

Most who are against tariffs reckon back to the days of Smoot-Hawley Tariff Act, but they misread those times in comparison. The Act didn’t bring On any kind of depression or economic distress, rather those problems were already in full swing. The Act was in “response” to the dire global economic situation at the time.

When looking at trade with another country, especially China, one has to examine precisely what products are purchased. In addition, will higher priced goods from China prevent consumers from spending money in the general sense. Many will undoubtedly spend their money elsewhere. In this area the net effect will be zero.

On the business side how will an increase really affect the bottom line. From my own experience in purchasing components from China, and other countries, there is an enormous markup on items, which even takes into account a discontinued product that has to be tooled up for production. Those who are faced with the largest impact very well may be the Chinese distributors who receive the greatest profits. They may be the ones who absorb the greatest impact and are able to do so.

Therefore the arguments on tariffs and their affects are simplistic at best and fail to take into account many facets. Take into account one example, as in Apple, and its Iphone. Does anyone think a company can reach nearly a Trillion dollars with hundreds of billions in liquidity and do this on slim profit margins. Apple isn’t alone in this model. Has the consumer reduced their purchasing of those products. Apparently not. I seriously doubt such tariffs will have the negative impact that some are predicting.

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